The ' elasticity of supply of the product produced is also very important. 

 The '-supply of most farm products is relatively inelastic, especially 

 within a season or over a short period of tine. This means that a change 

 in. the price of the product does not result in a proportional change in 

 production in the same direction. This f act i s associated with the bio- 

 logical and economic characteristics of the industry. For example, in 

 the milk industry, it takes two years or more to raise a heifer to the time 

 of first freshening. In canning crops, in most areas, only one planting 

 per year can be grown. Production' per acre can be adjusted with changing 

 price conditions but on 1 y within relatively narrow limits. Considering 

 all these factors, the more inelastic the supply of the product the more 

 difficult it would be for the bargaining association to be effective in 

 controlling production. 



Stokdyk estimated that the necessary portion of the total supply needed 

 for effective bargaining ranges from 25 per cent in 'some livestock 

 markets to 90 per cent in the case of some specialty crops. 5/ It is 

 axiomatic that the higher the percentage of total supply controlled, 

 the more' effect the association will have in price determination. 



Aside from control of volume, bargaining power is attained through 

 proper knowledge, interpretation and use of market information. More 

 will be said about this in a subsequent section of this study. 



Some Theoretical Examples 



Perhaps some of the discussion on the theory of bargaining can be 

 brought into closer focus by considering one or two examples pertain- 

 ing to the processed vegetable industry. 



Let us assume that two rather large chain-canning eompanias, A and B, 

 operate 5 and 6 canning plants respectively in a given area adapted for 

 •growing good quality canning tomatoes. In addition to these 11 plants 

 there are several other plants operated in the same general area by 

 smaller, independent companies. The producing area is characterized 

 by a relatively large number of small producers. Nona of them produce 

 enough tomatoes to justify operating their own canning plant. Pro- 

 cessors have depended chiefly upon these samll producers for their 

 total supply and e. c ch year have offered them advance contracts for 

 their tomatoes. 



5/ Stokdyk, E. A. Economi c Objectives of F armer s Coope ratives . Farm 

 Credit .Administration, Washington, D. C, Misc. Report No. 90. 1945. 

 P. 20. 



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